Tag Archives: Free Rider Problem

U.S. President Donald Trump insists that German Chancellor Angela Merkel “deposit money” and bear more of the costs of the NATO alliance.

The North Atlantic Treaty Organization (North Atlantic Treaty Organization), or North Atlantic Alliance, is an intergovernmental military alliance between 28 North American and European countries that was formed in 1949 in response to World War II. According to the NATO website, the alliance has goals of deterring Soviet expansionism; forbidding the revival of nationalist militarism in Europe through a strong North American presence on the continent; and encouraging European political integration (North Atlantic Treaty Organization). For NATO to work, members must make sure their armed forces are financially stable. To do that, NATO partners agreed on an official budgetary goal or standard that determines how much each country should contribute. That standard was, and still is, 2% of each country’s gross domestic product or GDP (Kottasova). Presently, however, the United States and its NATO allies are debating whether all members are shouldering their fair share of the cost burden.

Historically, the United States has provided the biggest share of military power to NATO. Over the decades, debates over whether or not this arrangement is fair have ebbed and flowed. For example, in a 2011 editorial in the New York Times, entitled “Talking Truth to NATO,” former Defense Secretary Robert Gates implied that the United States can no longer “afford to do a disproportionate share of NATO’s fighting and pay a disproportionate share of its bills, while Europe slashes its defense budgets, and free-rides on the collective security benefits” (Talking Truth To NATO). Donald Trump, the current United States President, is particularly concerned about this issue. Since his election, Trump has repeatedly and publicly complained that NATO allies are not paying their fair share financially. He contends that they are “free riders,” reaping the benefits of peace and security provided by the United States military (The Hill).

NATO was formed to protect the North Atlantic Alliance from military attacks from other countries. In order to be a part of NATO, countries must meet certain requirements. The (candidate) members must first have a secure and stable democratic system of government. Additionally, they must have good relationships with their neighbors and show a commitment to the rule of law and to human rights. Finally, the (candidate) members must contribute their military to the collective defense, and the country has to bring their budgetary legislation in line with NATO’s standards (Tomuic).

Illustrated by Dana Summers, the contemporary cartoon featured in this blog post first appeared on the US News website as their daily cartoon on May 31, 2017. The cartoon depicts Donald Trump confronting German Chancellor Angela Merkel in Brussels to discuss NATO and the amount of money Germany is (or is not) contributing to NATO. The cartoon represents the meeting Donald Trump had with NATO allies to discuss each country’s total contribution to the collective defense (Applebaum). That meeting occurred on May 25 in Brussels and focused on the “new security environment, including the Alliance’s role in the fight against terrorism, and the importance of increased defense spending and fairer burden-sharing” (Kottasova). Therefore, the cartoon illustrated by Dana Summers, came from the meeting Trump had with the allied countries regarding NATO and the expenses the U.S. has already paid.

In a New York Timesarticle, entitled “Trump Says NATO Allies Don’t Pay Their Share. Is That True?”, which was published a day after the meeting in Brussels, President Trump complained that “NATO members must finally contribute their fair share and meet their financial obligations, for 23 of the 28 member nations are still not paying what they should be paying and what they’re supposed to be paying for their defense” (Baker). The quote reflects Trump’s frustration with NATO partners who, in his perspective, have not held up their end of the deal. He believes the United States has been loyal to the financial agreement it made as a NATO member. In return, he believes the other NATO allies should be contributing more of their GDP to NATO.

Summers’ cartoon depicts Trump’s demand that other countries pay more as part of their commitment to NATO. In the cartoon, Trump looks frustrated, as though he has been waiting for the money he believes he is owed. In the illustration, the hat on the ground serves as if it is a collection plate, into which Angela Merkel is expected to “deposit money” for NATO. In this political cartoon, Merkel also symbolizes other European allies with whom Trump is frustrated. Merkel’s facial expression in the cartoon appears as though she too is upset—with the fact that President Trump is asking for money and because she does not think Germany and other European allies owe that money to NATO. In short, Summer’s cartoon captures the mutual dissatisfaction and consternation among allies over matters of fairness and free-riding.

Because NATO does not have legislative power, its members cannot be punished for not putting in as much money as the United States. However, as Summers’ political cartoon illustrates, Trump expects them to keep their word and pay more, in case one of the European allied countries goes to war or needs protection. Basically, having an alliance with these countries means believing that they will do what they agree to do. In Trump’s view, the other countries are not fully living up to their agreements vis-a-vis NATO. That is, they are not making financial contributions reflective of their GDPs. Trump is frustrated and feels that the United States cannot trust its NATO allies. This defeats the purpose of an alliance. Of the 28 countries that belong to NATO, the United States pays the most according to our country’s GDP, along with providing the most protection (Kottasova). Other NATO countries should accept the same degree of responsibility and loyalty that the United States has displayed.

President Trump feels as though the financial responsibility for NATO has not been reciprocated by other member countries. This “free rider” problem was further aggravated by the 2008 Great Recession, which significantly added to the United States’ debt. By the end of 2017, the United States’ national debt totaled approximately $19.84 trillion. To put this in perspective, this is equal to each citizen of the United States having to pay $60,890 to cover the national debt (Patton). Debt correlates to stress and worry. It is not something most Americans want to deal with in their personal lives, so it is no mystery that debt causes concern in many people regarding our country and its future (Foster).

The United States government operates on an annual budget each year. The budget provides a guide that helps determine where and how to spend the money generated through taxes. If the government only spends as much as it makes, then the United States stays on budget. When the government spends more than it takes in through taxes, it is forced to borrow money either from domestic and foreign investors or from other governments. The result is a budget deficit and indebtedness to other groups. The total national debt equals the sum of all budget deficits over the years, and for most of the last 60 years, the United States federal government has had an issue with spending more than it takes in, causing a massive national debt (Patton).

AnotherNew York Times article,“As Debt Fear Fades, Risks Remain,” warns Americans not to get too comfortable with the growing amount of national debt (Applebaum). One of the downsides of debt is that interest has to be paid for the amount of money that is borrowed. Interest is the money charged for borrowing a sum over an amount of time and is essentially a fee that must continue to be paid every year until the amount of money borrowed is completely paid off (“Interest”). Theaforementioned article estimates that the United States could be paying a total of $6 trillion in interest over the next decade. This $6 trillion is in addition to what was previously borrowed, and will only continue to grow until the loans are paid off (Applebaum).

National debt is not a new problem. It is as old as the United States itself. Concern about the prospect of American insolvency has been going on for years. The United States is not the only country that struggles with national debt. Many countries have national debt, especially after the worldwide financial meltdown of 2008 and protracted Great Recession.

The United States also experienced significant war debt after World War I. At that time, Great Britain and France owed the United States money that had been borrowed and loaned between the Allies during WWI (Potter). In 1931, a Dallas Morning News cartoonist named John Knott published a comic referring to that debt. Knott’s cartoon, “Better Than Nothing,” shows Uncle Sam, who represents the United States, standing off the coast of the Gulf of Mexico asking Great Britain and France to make good on the war debts they owed but were unable to repay. The representations of these countries look quite unfazed as they share a smoke together. The Knott cartoon is an example of how concern over debt in the United States has been a pattern in the context of the United States’ relationships with its allies. Similarly, debt is aggravating Trump’s concern over insufficient funding by NATO allies. Since the United States currently has significant debt, that increases the need for other NATO members to contribute their fair shares financially. For them not to pay their fair shares would be a continuance of allies not matching what the United States is contributing financially.

Both Knott’s and Summers’ political cartoons show representations of the United States insisting that its European allies either pay back debt from or pay more money to the costs of collective defense. These cartoons focus attention on the fact that other countries enjoy security provided by the United States, arguably without paying a sufficient amount to cover the costs of that security. Both cartoons suggest that the United States should be more fairly compensated for the significant contributions that it brings to allied defense.

Both historically and currently under Republican leadership, military and defense spending has been a high priority in America. This priority has continued under President Trump, increasing the financial pressure on the United States and making NATO contributions even more important. Chancellor Merkel may feel that her country’s spending for NATO is enough due to its non-monetary contributions (e.g., providing in-country military bases) and based on what she believes is important for German national priorities. However, President Trump feels that the United States is owed more money from Germany, and from other NATO allies, because of the expensive security umbrella that the US provides and that covers other countries in the North Atlantic Alliance. He insists that NATO allies are not paying their fair share financially and that the United States should be more fairly compensated for the significant contributions America makes to NATO.